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Mr. Minerd said the best hope for the economy is that interest rates will retrace some of their sharp gains as housing activity cools later this year, limiting the damage to the housing market and overall economy.

"The housing market is already feeling the impact of higher mortgage rates and by August the full effect those rates have on housing affordability will begin to show up in economic data," said Scott Minerd, managing partner at Guggenheim Partners. "Given the increasing importance of housing to the overall economic recovery, a drag on housing activity will undoubtedly hold back growth."